MARVIN MANDEL, Governor

187

non—action with respect to any item handled by it for
purposes of presentment, payment or collection is
governed by the law of the place where the bank is
located. In the case of action or non-action by or at a
branch or separate office of a bank, its liability is
governed by the law of the place where the branch or
separate office is located.

4—103. Variation by agreement; measure of damages;
certain action constituting ordinary care.

(1)   The effect of the provisions of this [subtitle]
TITLE may be varied by agreement except that no agreement
can disclaim a bank's responsibility for its own lack of
good faith or failure to exercise ordinary care or can
limit the Measure of damages for such lack or failure;
but the parties may by agreement determine the standards
by which such responsibility is to be measured if such
standards are not manifestly unreasonable.

(2)    Federal reserve regulations and operating
letters, clearing house rules, and the like, have the
effect of agreements under subsection (1), whether or not
specifically assented to by all parties interested in
items handled.

(3)     Action or non—action approved by this
[subtitle] TITLE or pursuant to federal reserve
regulations or operating letters constitutes the exercise
of ordinary care and, in the absence of special
instructions, action or non-action consistent with
clearing house rules and the like or with a general
banking usage not disapproved by this [subtitle] TITLE,
prima facie constitutes the exercise of ordinary care.

(4)     The specification or approval of certain
procedures by this [subtitle] TITLE does not constitute
disapproval of other procedures which may be reasonable
under the circumstances.

(5)   The measure of damages for failure to exercise
ordinary care in handling an item is the amount of the
item reduced by an amount which could not have been
realized by the use of ordinary care, and where there is
bad faith it includes other damages, if any, suffered by
the party as a proximate consequence.

4—104. Definitions and index of definitions.

(1) In this [subtitle] TITLE unless the context
otherwise requires

fa) "Account" means any account with a bank
and includes a checking, time, interest or savings